Environment Editor, The Sydney Morning Herald

Australia's wholesale electricity prices are likely to stabilise in coming years, and east coast states – with the exception of Queensland – should have ample generating capacity to cope with peak demand, according to a report by private analysts at ROAM Consulting.

Wholesale prices in New South Wales, Victoria, South Australia, Tasmania and the ACT are now averaging about $50 to $60 per megawatt-hour and "we expect to see much the same price for the next six years except for Queensland", said Andrew Turley, principal market modeller for ROAM.

Queensland can expect prices of $80 or more per MW-hour, because the ramping up of production of another energy source – liquefied natural gas – will add a "significant load" to power demand, sending prices higher, Mr Turley said.

The ROAM Insight report comes as the Australian Energy Market Operator (AEMO) warned in a separate study that eastern Australian states may face gas shortages over the next few years as a surge in LNG exports threatens to "create challenges for domestic supply".

Energy prices are likely to remain a hot political topic heading into a federal election year in 2013. Household power bills are up as much as 50 per cent over the past three years and gas prices are likely to surge in coming years as the gap between domestic and international LNG prices narrow.

Higher retail electricity prices, though, are forecast to keep demand in check even as wholesale prices trend sideways. Provided there is no return to the severe drought conditions of 2006-09, the higher power bills should preclude the need to build more generating capacity, including new gas peaker plants, for years to come, ROAM's Mr Turley said.

ROAM expects the demand for roof-top solar photovoltaic (PV) installations to trail off as states reduce incentives faster than prices fall. The growth in PV should resume, though, by 2018, assuming PV prices continue their decline.

So-called "demand response", in which consumers react to higher power prices during peak times by cutting their usage, will have only a limited role until meters and time-of-use prices are more prevalent across the National Electric Market.

“We're not expecting that to significantly change over the near term,” Mr Turley said.